All eyes were on the Bank of Canada last month as they cut interest rates by 25 basis points during their July 24th meeting, bringing the overnight policy rate down to 4.5%.

Monetary Easing Expected With sustained deceleration in inflation, we anticipate further monetary easing at the September and December meetings and into next year. The policy rate is likely to fall to 2.75% in 2025, easing the burden of higher monthly mortgage rates on renewals.

Consumer Spending & Immigration The influx of roughly 2 million immigrants to Canada has boosted overall consumer spending, helping to avert a recession this year. However, GDP per capita continues to decline.

 Labour Market & Inflation Trends Labour markets are softening with job vacancies falling sharply and the jobless rate rising from 4.9% to 6.4%. Recent surveys suggest inflation expectations and wage inflation will soon decline. Companies plan to cut spending on machinery and equipment, and commercial real estate valuations are dropping due to rising office vacancy rates.

Housing Market Dynamics Housing market activity has slowed due to interest rate increases from March 2022 to June 2024. Lower rates will spur transactions and increase new listings next year, improving housing affordability as price pressures remain muted. However, the housing shortage and a lack of experienced construction workers will likely mitigate this improvement.

Like this post and follow this page for more economic insights like this one!